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Strategies & Market Trends : IPO and Other Stock Plays -- Ignore unavailable to you. Want to Upgrade?

To: david777 who wrote (12518)	5/16/2005 11:26:10 PM
From: david777	Read Replies (1) \| Respond to of 13331

THE MARKET: SP500 tried to redeem itself from goat status, rebounding back above the neckline in its head and shoulders pattern. The small caps were into redemption as well, trying to recover into their May range. NASDAQ even broke higher, challenging the 200 day SMA. These moves put the indices back in their range (with NASDAQ, it remained in its range, even trying a breakout), but the low volume simply did not make many believers in the move. Some said you don't get a 100 point move in the DJ30 without a commodities crash, but that does not make a whole lot of sense because if commodities crash then the economy is not doing very well, and any gains in earnings due to lower commodities prices are swallowed in the bigger problem of a potential economic slowdown. Thus we got a rebound, but we don't have much faith in it. Now if it sold off another 150 points on DJ30, undercut 10,000 intraday, and then rallied back, that would have been something. As it was the indices merely let off some selling pressure; put another way, they let the anxiety that was building Thursday and Friday slip away without any final flushing out the system. With this low volume move we are thus expecting another test lower toward the prior lows on the NYSE indices. It can always surprise us and garner some volume on this move, but that falls more in line with hope. MARKET SENTIMENT Bulls versus Bears: Last week bulls ran up to 44.2% last week, up from the 43.5% level a week earlier. Bears fell to 28% after hitting 30.4%. That was the highest bearish level since August 2004. VIX: 15.68; -0.64 VXN: 18.77; +0.36 VXO: 14.76; -1.95 Put/Call Ratio (CBOE): 0.79; -0.23 NASDAQ NASDAQ kept going, adding to the rebound it enjoyed Friday when everything else was lower. Volume was not there as it tapped the 200 day SMA, but still setting up for a breakout attempt. Stats: +17.65 points (+0.89%) to close at 1994.43 Volume: 1.444B (-23.79%). Volume dropped off sharply as NASDAQ continued its move. Low volume allows indices to be pushed around, and that is what happened Monday as NASDAQ was spurred higher and higher by very light, below average volume. This was the first lower volume session in the past five; NASDAQ was pushing volume higher and higher regardless of the index direction, similar to what it did in late April when it bottomed. Not sure if it is that significant at this point as it has bottomed, but the Monday volume was definitely deficient with respect to supporting this bounce. Up Volume: 1.019B (-301M) Down Volume: 404M (-131M) A/D and Hi/Lo: Advancers led 1.54 to 1. Modest breadth. Previous Session: Decliners led 1.26 to 1 New Highs: 38 (-98) New Lows: 100 (-32) The Chart: The Chart: investmenthouse.com^ixq.html NASDAQ attempted the breakout, rallying further into the March/April consolidation range and butting up against the 200 day SMA (1995) on the close. It recovered all of the ground it lose off of its high Friday and then some as it broke out form the recent lateral move. It was an uninspired move outside of price, however; low volume moves can get tossed right back at you. Nonetheless it continues to set up for a better move even if this bounce up to the 200 day SMA fades as we believe it will do. No problem there; that will only it set up better for the next breakout attempt. We still have our doubts about NASDAQ taking the reigns of leadership, but it certainly is making noise as if that is what it wants to do. NASDAQ 100 basically matched NASDAQ in its move, rallying toward the 200 day SMA on lower volume. It too is in the late March/early April range and a breakout and higher high is a move over 1500. Will likely need a test before it is ready to try that move. SOX moved further over its 200 day SMA and moving into the March/April range from 410 to 420. May move up further in this range and then test the move over the 200 day SMA, setting up the break higher from there. SP500/NYSE The large caps tried to make up for their late week selling and recovered some important resistance, but as with the other indices the volume was lower and below average. Stats: +11.64 points (+1.01%) to close at 1165.69 NYSE Volume: 1.462B (-15.17%). Volume faded as SP500 rebounded to recoup over half the points lost Thursday and Friday. This does not wipe away the distribution to end last week and likely leaves SP500 open to another test of the April lows. Up Volume: 1.347B (+760M) Down Volume: 513M (-1.052B) A/D and Hi/Lo: Advancers led 2.54 to 1. The small caps were leading the market and helped a broad move. Previous Session: Decliners led 2.07 to 1 New Highs: 44 (+17) New Lows: 66 (-39) The Chart: investmenthouse.com^spx.html Again, a nice rebound from the higher volume selling to end last week, but it was not strong trade to support the move. SP500 recovered 1164, the neckline of the head and shoulders base and the 200 day SMA (1159) as it moved back into the recent range. It is attempting to make a higher low above the August 2003/August 2004 up trendline (1140.50) and the April low (1136). To do that it will likely need stronger buying; without additional trade it will make another test. One thing this does: it keeps the upside move alive, and if there is another test it will make that more credible in forming a bottom and delivering a breakout. The small caps and mid-caps led the market with 1.7% and 1.3% gains, making a higher low and retaking the 200 day SMA (307.83). It is trading in a range from 300 to 315; this move may challenge 315 (the 50 day EMA is at 314.32) before making a slight fade and setting up the next break higher through that resistance. DJ30 As with SP500, the blue chip are attempting a higher low after reversing modestly Friday on rising though still below average volume. Monday trade was lower as the index bounced up to the 18 day EMA (10,264). Without the volume it too is likely to need another test unless it rolls in on a further move toward the 200 day SMA (10,386). If you look at this pattern it looks cleaner that SP500, but both are attempting higher lows to further work on the base after some pretty shaky action to end last week. Stats: +112.17 points (+1.11%) to close at 10252.29 Volume: 217 million shares Monday versus 258 million shares Friday. The chart: investmenthouse.com^dji.html